Permissibility of Mortgages – An Open Letter to Sheikh Taqi Uthmani

 

 

In the name of God, most Merciful and most Compassionate

For the Attention of:

His Honour Sheikh Muhammad Taqi al-Uthmani (may God preserve him).

Assalamu alaikum wa rahmatullahi wa barakatuhu.

 

First and foremost, I would like to thank you for your services to Muslims generally and to students of knowledge specifically by establishing educational institutes and mosques and thereby spreading knowledge.

There is no doubt that the world is going through a hard economic period which is caused by political instability. These problems make people confused, especially the youth who are just stepping out into independent life. People require enough recourses to have a house and to be able to pay for their day to day expenses.

Muslims presently seem to struggle more than ever when it comes to issues of credit and employment. The reason for this is because it is not easy to find a job which is stated as “permissible’’ by all scholars. There are a lot of jobs, sources of income and transactions which are classed as ‘’prohibited’’ or ‘’disliked’’ by some of the scholars of Islam.

One of these issues is purchasing a house. It is no secret that hardly anyone can buy a house by cash payment. This causes people to seek help from individuals or organisations. Individuals most likely will not help because of the current economic situation so people go to the banks. In this scenario, a Muslim finds themselves confronted with two options; either he will avoid dealing with a bank in order not to commit a sin by dealing with “Riba[1]’’, but then he will live in hardship for the rest of his life. Alternatively, he will deal with the bank but live the rest of his life feeling guilty, and the burden of guilt that we feel from sin is not an easy one to bear either. So Muslims credit options, already severely constrained after the so-called “credit crunch’’ which has led to seemingly endlessly increasing UK house prices and resultant unaffordable rent rises due to exploitation by unscrupulous landlords, are even more limited vis-à-vis their non-Muslim brothers and sisters.

The issue of purchasing a property with the support of a bank is well-known to be controversial amongst Muslim academics. It is likewise well known that most of the scholars consider certain types of purchasing a house through the banks to be “prohibited’’.

Your opinion on this issue is famous, if not the most famous. As far as I know, you state that there are two ways of purchasing a property through banks, one of which is permissible with the second being prohibited as ‘’Riba’’ (prohibited interest).

Regarding the way that is considered permissible, it is when, for instance, someone purchases a house for £100,000: The buyer makes a deposit of £20,000. He now owns a 20% share of the property and the bank owns an 80% share. The mortgage payments of the buyer are formed by them paying rent on the 80% share owned by the bank and also a mortgage for the 80% owned by the bank. As such the share of the house the buyer owns increases over time whilst the amount owned by the bank decreases. Throughout the entire term of the mortgage however, the house is in fact owned by the bank, as demonstrated by the deed. This, according to the Hanafi School, is an invalid transaction. The second, considered prohibited, way is to borrow money from the bank to buy a house and pay it back to the bank with interest – for example borrowing one hundred thousand pounds and paying back two hundred thousand. This is prohibited according to the Hanafi, Maliki, Shafei and Hanbali schools of Sunnah.

According to what scholars understand, the most popular method in Western countries is the abovementioned second way, called “Mortgage’’. However, I think this is incorrect; ‘mortgage’ is not related to the prohibited second way and nor is it a scenario where ‘’Riba’’ (prohibited interest) is involved.

In this letter I would like to explain this issue from my understanding, and also to know what you think about it. I want to thank you in advance and hope you won’t consider this a critique of you or anyone else. My only concern is to serve people who are in hardship and confusion.

In brief, the procedure of taking out a mortgage is as follows:

  1. The buyer expresses his desire to buy a property to the bank and that he requires to borrow a certain amount of money.
  2. The bank checks the financial status of the buyer to make sure that he will be able to pay the debt back. In order make a full check, it asks him for certain documents. Each bank will have its own criteria which have to be met in order to be qualified to borrow money.
  3. If the buyer meets these conditions, then the bank looks into the property that buyer wishes to buy. The bank will check the property to make sure that it meets the criteria of the bank.
  4. If the property meets its conditions, then the bank lends the money by transferring it to the bank account of the buyer.
  5. The buyer can then purchase the property.
  6. Afterwards, the buyer has to pay the money back to the bank with some profit (which depends on what they have agreed). The buyer has to pay it back within a certain period of time.
  7. The time period differs according to what the buyer agreed with the bank (it could be ten years or more).
  8. The interest that the bank will be charging the buyer depends on what they have agreed – it could be three percent or more or less.
  9. As time passes the payable amount increases with it. For example, if the buyer borrows one thousand pounds and pays it back within the first year, then he has to pay one thousand and thirty pounds. But as time passes the debt increases, because the interest is not based on the initial amount that is borrowed but rather on the amount which is due each year. This necessitates the payable amount to differ based on the time of the payment.

This is a brief illustration of the issue. There are of course a few other details which however have no bearing on the Islamic legal verdict.

An explicit look at the issue may give the impression that it is the prohibited form of interest (Riba). However, I think that this assumption is incorrect.

I would like to explain a few issues before putting forward my verdict.

Tawkeel[2] (representing)

 

‘Wikala[3] linguistically is sometimes used for ‘preserving’, as God said: ‘They said; God is enough for us, and he is the best Wakeel’[4]. So it means ‘protecting one’. He also said: ‘There are no gods but Him. So make Him your Wakeel’ – i.e. to protect you. It can also mean ‘to defer things’.

In Sharia terminology, this word is used for the same two meanings for which it is used linguistically; “to defer the control over something to a representative’’ and “preserving something by the representative’’[5]

The Rukn[6] of Tawkeel is a person appointing the representative to act over the object of wikalah.

Is it compulsory to use only the literal words meaning ‘wikalah’?

It seems to be compulsory if we look at the statements of the Fuqaha explicitly, because they said the rukn of it (wikalah) is to say ‘’I appointed you as my representative to sell this item or to buy it’’[7]

However, if we look into the statements of Fuqaha[8] deeper, we understand that using the literal [exact same] words is not compulsory. That is because they said the rukn of it is the words by which wikalah is confirmed. Additionally, the examples that Fuqaha have given prove that the literal same words are not compulsory.[9]Ibn Abideen said in ‘’Radd Muhtaar’’: ‘The rukn of wikala is anything that means ‘offer and accept’ – even indirectly such as silence’[10]. So the really important thing is to express that a person is appointing the second person as a representative[11]. [Some more examples are mentioned in the original Arabic copy of the letter]

The permissibility of wikalah by other words besides the literal ones is also confirmed by the Quran, as it is mentioned in Surah al-Kahf; “Send some of you with these silver coins to buy food for us’’ [Surah Kahf; 19]. So they said “send some of you’’ and didn’t say ‘make tawkeel of some of you’. I don’t doubt that this issue is known to a person such as yourself – I just mention these examples to clarify what I am talking about.

 

Establishing Wikalah by Iqtidha (Implicitly)

 

Iqtidha al-nass is a part of a sentence which is not mentioned verbally, but the sentence cannot be correct without this extra.[12]For example, if someone says; “free your slave for a thousand pounds for my Kaffarah[13] (penalty)’’, and the second person replies; ‘’ok’’. This transaction will be valid and his Kaffarah will be accepted as all of that will be valid by Iqtidha. That is because his request was implicit; “sell me your slave for a thousand pounds. Then be my representative to free the slave as my Kaffarah’’.

 

Permissibility of Tawkeel for Oneself

 

Is it permissible to make someone a wakeel in something which benefits the wakeel?

No doubt this is permissible, and its permissibility is setup by the Quran. In Surah Kahf God mentioned that Ahl Kahf sent one of their number to buy food for them. No doubt this Wakeel would buy the food and he would also be one of the people who would eat it. Some scholars mentioned that a condition for the validity of such Tawkeel is that it should not benefit him only. But this condition doesn’t have a solid basis, and it is disputable.[14]

I do not doubt that you are aware of this and there are many examples of this issue. For instance, the scenario that is mentioned in ‘Al-Muheet al-Burhani’: If person A makes Tawkeel of person B to free himself from the debt that he owes to the person A and person B acts on it, it will be valid.[15]

 

Initial Status of Transactions According to the Hanafi School

 

The initial status of all kinds of transactions is that they are permissible. One of the well-known principles of the Hanafi School is that everything beside these three is permissible [by default]: 1. Bloodshed 2. Sexual acts 3. Rituals of worship.[16]

Imam Shaykhee Zade said: ‘Be noted that the initial status of everything is that it is permissible except sexual acts. God said: ‘He is the one who created everything on Earth for you’. Also: ‘Consume everything halal and desirable which is on Earth[17]

Based on this, we say; everything is permissible unless it is proven to be not permissible.

 

A Commodity Having Two Prices

 

Setting up two or more prices for the same commodity because of different conditions of the commodity or of something else is permissible; such as the price differing based on the time of payment. So for instance, if the buyer pays today the price is one thousand pounds, but if he pays tomorrow it will be two thousand. The price could differ for other reasons too, such as cheaper pricing for poor customers, and a higher price for rich customers.

Imam Quduri said: ‘It is permissible for the buyer to increase the price. And permissible for the seller to increase the commodity and decrease the price. And legal action will be taken towards that all’’.[18] He also said: “If a customer says [to the tailor] ‘’if you finish stitching today I will pay you one dirham[19], if tomorrow, half a dirham’’, so if he stitches it today he gets one dirham, but if tomorrow he gets a standard fee according to Abu Hanifa as long as it is not more than half of a dirham. His two students said; both of the conditions are valid and the tailor gets paid depending on which time he finishes.[20]

 

Riba (Prohibited Interest)

 

Its definition according to Sharia law is that it is an extra which is given (for nothing) in the transaction of exchanging a valuable for a valuable.[21]

Riba is prohibited in any commodity which is measurable by weight or volume if it is exchanged by exactly the same commodity.[22] If both of these two conditions (i.e. measurability in the same units, and the commodity being the same from both sides) are found to be missing, Tafadhul[23] and Nasaa[24] will become permissible. If only one of the two conditions is present, then Tafadhul will be permissible but not Nasaa. (As above, if neither of the two conditions are present then both of Tafadhul and Nasaa will be permissible).[25]

The act of a person will be considered permissible as much as possible. Quduri says: ‘If someone sells two dirhams and one dinar[26] for two dinars and one dirham, it will be valid. And it will be considered that each of currencies was exchanged for opposite one. Anyone sells eleven dirhams for ten dirhams and one dinar, it will be valid. And it will be considered that ten dirhams is exchanged for ten dirhams, and one extra dirham for one dinar…[27]

There are many examples of this principle in the Fiqh books, which proves that we try to consider the action valid as a default.

 

Debt

 

Debt according to the Sharia terminology is a Mithliy[28] commodity that you borrow and demand back.[29] Its legal ruling is that the person who is taking the debt will own it once he has received it according to Abu Hanifa and Muhammad.[30]

Thus, debt is the borrowing of an item from someone for certain period of time under the condition of returning it back. The ownership of the borrowed item will be transferred to the person who is taking it, which necessitates that he is free to do with it as he wants – the person who is lending it out has no right to dictate what he can and cannot do with it.

 

The Difference Between Debt and Tawkeel

 

The difference is very obvious; in tawkeel, ownership will not be transferred to the representative, whereas in ‘debt’, ownership gets transferred to the person who is borrowing the money. He will retain this ownership until such time as he has to pay the debt back. During this time though, he is free to do as he wants with it.

 

The Issue of Mortgage

 

Coming back to the issue of mortgage, I say it cannot be Riba, because the bank does not ‘lend’ the money [as per the Shariah definition of lending or debt]. That is because the buyer is not free to do with the money whatever he wants. The bank won’t allow him to do anything with it except buying that exact house which he agreed with the bank to buy.

This is not called ‘debt’. That is because a person can do with the money as he wishes in the case of ‘debt’. But in the issue of a mortgage the person is not free.

The different topics that I have mentioned necessitate that a mortgage is Tawkeel and not a debt because the scenario of a mortgage happens as follows:

  • Customer expresses his desire to buy a house to the bank.
  • Bank follows its procedure, then it appoints the buyer to buy the house on behalf of the bank with the money which he gets from the bank by cash payment.
  • Then he buys the house from the bank by instalments over certain period of time. After that he pays back that money during that time period.

 

This is the practical and technical explanation of a mortgage. This is because the meaning is the most important thing in transactions and not what one says (i.e. it is about what you do and not what you say).

Thus, when the bank says to the customer; ‘this is a debt we are lending you so that you can buy a house, and you have to pay it back to us’, this statement is incorrect literally but yet is correct by Iqtidha. That is because the bank doesn’t give the ownership of the money to the customer – the bank will block you from using this money for anything besides buying that specific house – and that is not called lending but rather ‘tawkeel’.

This is not any type of riba, because the bank does not give away the money to the customer. Therefore the customer deals with the bank twice:

  1. When he represents the bank to buy the house.
  2. When he buys the house from the bank.

As for the price not being fixed but differing based on the time of paying it back, as we said, it is permissible according to the two students of Abu Hanifa without any conditions. It is also permissible according to Abu Hanifa with the condition that I explained above (i.e. for the late payment he has to pay a ‘standard price’, and the ‘standard price’ is what is known by custom).

This is all I wanted to present to you. I did not go too deeply into the details, proofs and references because I know that you already have enough knowledge of these.

I await your comments on this letter.

Please do not forget me in your prayers.

Assalamu Alaikum Wa Rahmatullah.

 

 

[1] Riba is prohibited interest. It is further explained below.

[2]Tawkeel’ is the process of giving authorization to a person to represent you

[3]Wikala’ is a synonym of Tawkeel

[4]Wakeel’ is an official representative.

[5]  انظر “بدائع الصنائع في ترتيب الشرائع” لعلاء الدين الكساني المتوفى سنة 587 هـ , جـ 6 صـ 19 , من منشورات دار الكتب العلمية , بيروت , لبنان , الطبعة الثانية 1986

[6] ‘Rukn’ is the essence of something, such as the essence of ‘human’ is that it is a thinking animal.

[7]  “الفتاوى الهندية” جـ 3 صـ 516

[8]Fuqaha’ means jurists, plural of ‘Faqeeh’ – jurist.

[9] Examples are found in the books of Fiqh and Fatawa

[10]   “رد المحتار” جـ 11 صـ 357

[11]   “الفتاوى الشامية” جـ 3 صـ 519

[12]  انظر “كشف الأسرار شرح منار الأنوار” للإمام أبي البركات النسفي المتوفي 710 هـ جـ 1 صـ 395 , من منشورات دار الكتب العلمية .

[13]Kaffarah’ is a financial penalty for certain types of errors committed by a person such as; not keeping an oath, divorcing one’s wife in a humiliating way etc

[14]  انظر “المحيط البرهاني” جـ 15 صـ 4

[15]  انظر “المحيط البرهاني” جـ 15 صـ 3

[16]  انظر “رد المحتار” 1: 105، 4: 161، 6: 458

[17]  انظر “مجمع الأنهر” 2: 568

[18]  انظر “مختصر القدوري” صـ 86

[19] Dirham is a silver coin used in the past. In our time there is a currency that is used in some Arabian countries called Dirham, and that is not related to the Dirham of the past centuries.

[20]  انظر “مختصر القدوري” صـ 103

[21]  انظر “الفتاوى الشامية” جـ 3 صـ 125

[22]  انظر “مختصر القدوري” صـ 87 , “الفتاوى الشامية” جـ 3 صـ 125

[23]Tafadhul’ means something been more on one side, for example one of two partners having more capital. In this context Tafadhul means one of the buyers or sellers having extra on his side.

[24]Nasaa’ means delaying and doing something later. In this context it means either the buyer or the seller releases the commodity later.

[25]  انظر “مختصر القدوري” صـ 87

[26] Dinar is a golden coin that used in the past centuries.

[27]   انظر “مختصر القدوري” صـ 90

[28]Mithliy’ means a commodity that is measurable by litre or kg.

[29] انظر “الشامية” جـ 7 صـ 388 , من منشورات دار الكتب العلمية , بيروت , لبنان , الطبعة الثانية سنة 2003 م .

[30]   انظر “الشامية ” جـ 7 صـ392

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25 Comments Add yours

  1. Aisha latif says:

    Also the person buying the house never actually sees or receives the money directly as it is given to their legal representative who then actually forwards it to the legal representative of the person selling the house……Therefore the money cannot be used for anything else as mentioned above.

    Liked by 2 people

  2. Abdul quddus says:

    I am amazed and shocked by this letter, has the sheikh suddenly realised that mortgages are not RIBA or did he know this all this time and not said anything.

    Like

  3. Please check our Video lessons of Mukhtasar Quduri, Chapter of Buyu’ which took place year 2010.
    We had over 4 hours discussing it with the student (some of them are solicitors who runs a business based on Amanah Mortgage).
    I explained this issue in much more depth there.

    Here you can see it in summarised form;

    Like

  4. AnonyMoose says:

    Sheikh, how does fractional reserve banking fare under Islamic economics? We know that mortgages are by far the most prominent tool utilized in keeping the system propped up. How can a bank purchase a house with something it does not have? The cash is “created” in an account there and then.

    Like

  5. Maz says:

    This is an astonishing attempt to make Riba halal with flawed premises which inevitably were going to lead such flawed results.

    The Book, the Sunnah and whatever they may guide us to in terms of Ijma’a of the Sahaba and the Qiyas are the exclusive legitimate sources of legislation for Muslims. Economic situations, upturns and downturns, lack of jobs, hardship, austerity or any other excuse would not change the fact that mortgages are Haram. Usury is Haram and this is known from Islam by necessity. The issue of names and jargons does not alter the fact that the bank gives the mortgagee a loan and charges him/her interest.

    The fact that the bank does not give the money to the borrower directly and the fact that it restricts him to exclusively purchase the house he has chosen does not alter the fact that the loan is usurious. Name it Tawkeel or anything you like, it does not change the reality which is still Haram. Besides, is the sheikh really telling us that if the issue is one of Tawkeel, it would be then Halal to take a loan with interest? Is this not the same as saying you can drink an intoxicant but call it lemonade; or eat pork but call it lamb?

    The issue is not names or the meanings of the words, no matter how it is dressed up; the issue is the reality of the transaction.

    Buying a product from a seller who offers two prices – one for full payment now and a credit price is halal but it clearly does not apply to a mortgage no matter how hard one tries to misconstrue it as such as the bank is not selling a house it already owns to a buyer at an agreed fixed, albeit, higher price. The bank is providing finance to the buyer to purchase from a third party, with interest. Simple.

    It is erroneous to misconstrue the scenario as the bank being the purchaser of a property which it will then sell to the mortgagee upon completion of the original money lent plus interest with two transactions rolled into one. This in itself would be haram if it were the case because it mean that the bank is purchasing the house and reselling it to the mortgagee simultaneously – Islam prohibits two transactions in the same contract as stated in hadith where the Messenger (saw) prohibited two transactions in the same contract.

    But in reality, the bank is not buying the property. Does the bank really want the buy the house and are appointing someone to do so on their behalf? They cannot do it themselves or is it because they do not know how to buy a house?

    It is incorrect to allege the person borrowing the money from the bank is actually acting as the agent of the bank who is the lender? When does his role end as an agent acting on behalf of the bank? The bank would never buy the house unless the real buyer, the mortgagee was interested in borrowing the money to buy it with interest.

    The falsehood of the attempt to paint the borrower as a Wakil is further illustrated by the fact the borrower will only be allowed to act as a “wakil” if he puts down a hefty deposit and if he goes back on his word, he would incur heavy penalties… Is this Islamic? By Allah far from it. So to make the mortgagee a “wakil” is impossible, unless it was serving a pre-disposed opinion which had been arrived at first, to alleviate the hardship as stated at the start, followed by a search of these kind of justifications dressed with Islamic jargon wrongly applied to prop it up.

    Furthermore, to claim that all the time, we had a Wakil (agent) and a Muwakkil (the bank) but neither of them knew about it, seriously? What kind of a contract is this? Not one recognised by Islam I can assure you. To dress the Riba on top of the money borrowed as a higher price of the same house which the wakil suddenly turned into a buyer will have to pay just does not wash. This is RIBA whichever way you look at it.

    Like

    1. I don’t think you read the article properly. There are few errors in your comment which is clearly explained in the article.

      – Borrowing the money it is when you can do with it whatever you want until you pay it back on the date which you agreed.

      – Tawkeel is when money doesn’t belong to you.

      – As I said, what you call is not important. The important thing is only what practically happens.

      Now question, this money that bank “lends” you for mortgage, can you use it to go for a holiday in Las Vegas? , or to do anything beside buying that specific house?

      And few more errors that you made. Just re read the article by trying to understand.

      Like

  6. I gave you enough time to answer to one and only question which is;
    ”this money that bank “lends” you for mortgage, can you use it to go for a holiday in Las Vegas? , or to do anything beside buying that specific house?”

    But as we all saw, you didn’t answer or you was unable to answer for some reason. Don’t worry you are not the first person who is trying to fire the article. Unfortunately your colloquies failed before you, and we will see if you are better than them.
    Now lets clarify the issues that you’ve raised;

    You said;
    ”This is an astonishing attempt to make Riba halal with flawed premises which inevitably were going to lead such flawed results.”

    That what we are going to see now.

    You said;
    ”The Book, the Sunnah and whatever they may guide us to in terms of Ijma’a of the Sahaba and the Qiyas are the exclusive legitimate sources of legislation for Muslims. Economic situations, upturns and downturns, lack of jobs, hardship, austerity or any other excuse would not change the fact that mortgages are Haram.”

    I think that you are molana or sheikh, because it looks like Jummah Khutba. I mean it was sophisticated argument. That’s because there is no any verse in Quran and Sunnah and other sources that you mentioned where it says ”Mortgage is Haram”. But there is a place where it says ”Riba is Haram”.
    I don’t think that you even can define; Quran, Sunnah, Ijma’ etc.
    What you called ”Quran” says; ”Is there anyone who is more oppressive than the one who lies on behalf of God?!”
    Now question;
    Where God said in Quran ” Mortgage is Haram” ?

    You said;
    ”Usury is Haram and this is known from Islam by necessity.The issue of names and jargons does not alter the fact that the bank gives the mortgagee a loan and charges him/her interest.”

    I am glad you’ve understood at least this bit from the article. Now, look and how to apply it;
    If bank gives you a money and says; This is your dowry, for letting us to marry you! But, you can only use it to by that house which is located in that specific address!”
    Do you think that it was tawkeel or dowry!.
    So, are you married to the bank?

    You said;
    ”The fact that the bank does not give the money to the borrower directly ”

    That is actually against you!
    If it would be a ”borrowing money and paying it back with some interest” then they would give it to you to do with it what ever you want.

    You said;
    ”and the fact that it restricts him to exclusively purchase the house he has chosen does not alter the fact that the loan is usurious.”

    Is that what you made up on your own authority?
    Means what practically happens is not important but what they say is important?
    What is the definition of ”Tawkeel” and ”Qardh”?
    If I give you a money and say to you; ”It is a gift to your father, but you have to buy a food and bring it to me by using this money!”
    What is it? Is it a gift or maybe some type of ”usury” or also ”dowry”?
    Owner of the money specifying one and only way of using it and excluding everything else is called ”Tawkeel”!

    You said;
    ”Name it Tawkeel or anything you like, it does not change the reality which is still Haram.”

    Just small question (sorry I don’t know your title, and most likely some type of Alim. that’s because of your inconsistency in your comment);
    Do you actually care of names or do you care about what practically happens?
    First you said that names are nothing!
    Then you said that money owner restricting the way of using the money is just nothing!
    And now you are back to say; call it what ever you want.
    Be consistent!
    Call the money that bank gives you what ever you want ”usury”, ”debt”, ”qardh”, ”interest”, but that doesn’t change the fact that Bank doesn’t give you any right to use it for anything but only for buying that specific house!

    You said;
    ”Besides, is the sheikh really telling us that if the issue is one of Tawkeel, it would be then Halal to take a loan with interest?”

    Yes, I am telling you guys that if Bank ”borrows” you a money and then restricts it’s usage then yes you can take it!
    Also, you can call it ”loan with interest”, or you can call it ”your dowry”, or anything else pleases you, but that doesn’t change the fact that it is ”Tawkeel”!

    You said;
    ” Is this not the same as saying you can drink an intoxicant but call it lemonade; or eat pork but call it lamb?”

    Yes, it is Exactly same!
    That money that bank gaves you as a ”dowry” was actually tawkeel! So, don’t take what they said seriously…

    You said;
    ”The issue is not names or the meanings of the words, no matter how it is dressed up; the issue is the reality of the transaction.”

    I think it is two or more people taking turn to write the same comment…

    You said;
    ”Buying a product from a seller who offers two prices – one for full payment now and a credit price is halal but it clearly does not apply to a mortgage no matter how hard one tries to misconstrue it as such as the bank is not selling a house it already owns to a buyer at an agreed fixed, albeit, higher price. The bank is providing finance to the buyer to purchase from a third party, with interest. Simple.”

    Oh, ok. So there is no two prices.
    I think this comment finished everything.
    I think it is totally another person has written this bit.

    You said;
    ”It is erroneous to misconstrue the scenario as the bank being the purchaser of a property which it will then sell to the mortgagee upon completion of the original money lent plus interest with two transactions rolled into one. This in itself would be haram if it were the case because it mean that the bank is purchasing the house and reselling it to the mortgagee simultaneously – Islam prohibits two transactions in the same contract as stated in hadith where the Messenger (saw) prohibited two transactions in the same contract.”

    It was clarified in the article.
    Just read the following from the article;
    For example, if someone says; “free your slave for a thousand pounds for my Kaffarah[13] (penalty)’’, and the second person replies; ‘’ok’’. This transaction will be valid and his Kaffarah will be accepted as all of that will be valid by Iqtidha. That is because his request was implicit; “sell me your slave for a thousand pounds. Then be my representative to free the slave as my Kaffarah’’.

    Now question;
    In this example of Usul Shashi, how many transactions do you find in one sentence of ”free your slave for a thousand pounds for my Kaffarah” ?

    Hadeeth that you’ve quoted you have used that incorrectly as you see!
    So, go and read it’s commentary!

    You said;
    ”But in reality, the bank is not buying the property. Does the bank really want the buy the house and are appointing someone to do so on their behalf? They cannot do it themselves or is it because they do not know how to buy a house?”

    I think you better ask ”Why is it called Bank and not madrasa for example?”
    They do it as they want, and its your duty to see what is practically happening and link that with it’s correct names in islamic books!
    It’s so simple!

    You said;
    ”It is incorrect to allege the person borrowing the money from the bank is actually acting as the agent of the bank who is the lender? When does his role end as an agent acting on behalf of the bank? The bank would never buy the house unless the real buyer, the mortgagee was interested in borrowing the money to buy it with interest.”

    If you would read the article with no emotions, and with no intention of critique you would get your answer there.
    But just re-read this bit again;
    For example, if someone says; “free your slave for a thousand pounds for my Kaffarah[13] (penalty)’’, and the second person replies; ‘’ok’’. This transaction will be valid and his Kaffarah will be accepted as all of that will be valid by Iqtidha. That is because his request was implicit; “sell me your slave for a thousand pounds. Then be my representative to free the slave as my Kaffarah’’.

    I gave some more examples for this confusion in the very article.

    You said;
    ”The falsehood of the attempt to paint the borrower as a Wakil is further illustrated by the fact the borrower will only be allowed to act as a “wakil” if he puts down a hefty deposit and if he goes back on his word, he would incur heavy penalties…”

    This part of the comment actually proves that you are one of the ulema (because of the same reason that I mentioned)!

    As Usul shashi explained to you, that guy was ”wakeel” as well as ”seller”.
    Is it Ok for this ”’seller” of Usul Shashi to get some payment upfront?
    Or is that unislamic because he is also ”Wakeel”? ))

    You said”
    ” Is this Islamic? By Allah far from it. ”

    If Islam and Allah means that you know from your culture, then no it is not islamic and no allah!
    But if it is Islam and Allah that is described in Quran then, I have proven in this article that Yes it is!

    You said;
    ”So to make the mortgagee a “wakil” is impossible,”

    You didn’t clarify the type of this ”impossibility”. Is it logical impossibility or textual, or sophistic?
    If it is logical, does it cause kufr if you believe it is possible?

    The ”impossibility” needs very strong proves which are undeniable.
    But comment in the style of Jummah Khutba doesn’t give that strength and weight to the argument.

    You said;
    ”unless it was serving a pre-disposed opinion which had been arrived at first, to alleviate the hardship as stated at the start, followed by a search of these kind of justifications dressed with Islamic jargon wrongly applied to prop it up.”

    It is another prove that you are alim or sheikh or molana.
    It is their habit mainly to insult people’s intention.
    As you saw, if one of us two was serving some opinion, then it wasn’t me.

    You said;
    ”Furthermore, to claim that all the time, we had a Wakil (agent) and a Muwakkil (the bank) but neither of them knew about it, seriously?”

    Yes, seriously!
    So in the example of Usul Shashi, did they know about what you are requesting?!

    As for the wakeel knowing;
    We don’t say that ”wakeel” should know the word of wakeel, and it’s conditions as it is in Mukhtasar quduri!
    But, both of the Bank and Buyer should know and assume that this money cannot be used for anything, but only for the thing which Bank specified.
    If they know that we say they know that it is ”Tawkeel”.
    But if buyer thinks that this money that Bank gave him belongs to him and he can do with it whatever he wants. Then we say that it is invalid ”Tawkeel” because buyer doesn’t know that he is wakeel, but thinks that he is borrowing!

    You said;
    ” What kind of a contract is this?”

    Well, it’s obvious that it is a contract that you’ve never studied dear Man!

    You said;
    ” Not one recognised by Islam I can assure you. ”

    Don’t assure!
    Islam is not you.
    Unless you think that you know 100% about Islam!
    You better go and study!

    You said;
    ”To dress the Riba on top of the money borrowed as a higher price of the same house which the wakil suddenly turned into a buyer will have to pay just does not wash. This is RIBA whichever way you look at it.”

    Yes, it is as a minimum fourth guy is finishing off the comment that first person started!

    Liked by 1 person

    1. Maz says:

      Apart from the fact that the reply was riddled with personal insults and allegations, it still failed to make Riba halal with silly arguments like the Quran does not say Mortgage is haram but that Riba is haram; like interest would be halal since the Quran did not say interest (Fa’ida) is haram or pubs would be halal since the Quran did not mention them.

      It is common knowledge that a Mortgage is money lent with interest which is Riba and nobody will believe otherwise except the unwavering maureed and those who are looking for a stamp of approval from a “shaikh” to make it halal.

      Like

  7. AnonyMoose says:

    Assalaamualaikum,

    With respect Sheikh I understand and follow what you are saying. Please consider what I am saying from an economic perspective. You have clearly demonstrated that the nature of a thing can not be changed by the name of it. However, my question regarding fractional reserve seems to have gone amiss. This is a fundamental problem in principle with both “Islamic” mortgages and conventional mortgages. How can the bank lend that which it does not have? I fear that a blanket permissibility for either system is highly problematic as this problem is a systematic one. I understand that a ruling in principle can not be refuted without demonstrating a problem on the principle level.

    You said: “4. If the property meets its conditions, then the bank lends the money by TRANSFERRING it to the bank account of the buyer.” is part of the procedure of taking out a mortgage.

    Transferring implies the bank has the money at hand, which it most certainly does not! It is created, almost like an IOU, in the buyers solicitor account to complete the purchase. Once the repayments are made with interest by the buyer the credit is “destroyed” on the bank balance books. Repayments will by Does this even fulfil the nature of tawkeel or is this just background noise to be ignored?

    Now you might argue that payment this way is unavoidable. And that it is no different from if a purchase was made with cash present in the banks account. However, I would argue that this is not correct, as leveraging contributes to credit creation (and thus creating bubbles, inflation and supporting the extorting system) which a payment by current cash holdings does not do. Should someone (meaning a certain amount of large account holders) wish to claim back on his IOU (this can be done by simply withdrawing money from the bank) the bank would not be able to settle this payment (as this was created). Hence the beginning of a “run on the money”.

    This is literally just the surface of all the problems. The money system is closed. So where do the interest repayments amount come from in the current system? The excess money made from the interest dilutes the monetary worth of anyone holding the currency as it needs to be created. This leaves bankers better off holding cash they received for giving cash they didn’t have to start with out.

    I look forward to a response inshaAllah.

    Like

  8. Maybe you made a sense in English, but not in islamic law.
    Read the article.
    Mufti Taqi has got the letter, and he will do his best to defend his position by trying to find some catch in my statement. Him being unable to respond proves that my stance is stronger than his argument.

    Like

    1. AnonyMoose says:

      I have read the article thoroughly. I do not defend the position of the esteemed Mufti. To clarify, are you suggesting that such market crashes are possible and acceptable within a shariah system? Furthermore, can one place a trade with something he doesn’t have in his possession, like is the case with both conventional and Islamic mortgages? I believe the political instability is due to this system and not vice versa.

      Like

      1. You can talk about mortgage from different angles, such as political, economic, social , psychological etc… Each of them will have it’s principles of validity and non validity. But political principles of validity don’t effect on social validity.
        That how we have fiqhiy principles, and you should not mix up the things to derive fiqhiy legal position.
        From your comment I can see that you have no any knowledge of fiqh and usool.

        Like

  9. Abu Talhah says:

    Assalaamu alaykum,

    Shaykh, please do let us know if and when the honorable Mufti replies to or otherwise comments on your letter. And may Allah reward you for your efforts and continue to grant you the tawfeeq to endeavor toward and stand up for valid scholarship. Ameen.

    I’d like to request, if you can find the time, that you please write up an explanation of how you arrived at your opinion on the ruling of the beard and its length. May Allah preserve and strengthen you!

    Fi amanIllah

    Like

  10. Mohammed Hanif says:

    ‘Bank follows its procedure, then it appoints the buyer to buy the house on behalf of the bank with the money which he gets from the bank by cash payment.’

    Dear Respecred Shaykh Atabek,

    Assalamu alaikum wa rahmatullahi wa barakatuhu.

    My comment is in regard to the quote above. In a conventional mortgage arrangement, I believe that the purchase of the property is by the buyer and in the name of the buyer using the loaned bank money. At no stage does the bank own the house.

    What tbe bank has is a lien/right over the property: it takes physical possession of the deeds to ensure that its loan is repaid and the buyer cannot sell the property against the bank’s interests.

    If the buyer fails to keep up his repayments, the bank can enforce its rights by foreclosing in the house to recover its debt.

    Thus the bank at no stage of the loan owns the property or delegates the buyer to purchase the property with its money. Which I believe is your u derstanding of the situation per the headline quote.

    Rather, in the usual scenario, the purchaser initiates a loan from the bank who directly transfers the money into the selle’s account and thereby effecting a loan arrangement with the buyer. The buyer now is the sole, legal owner of the property which he financed with debt capital.

    I understand your thorough explanation of the difference between qardh and tawkeel but I do not see a tawkeel/delegatory situation in the conventional mortgage that exists in the UK.

    I respectfully submit my thoughts on your analysis and look firward to your reply,

    Mohammed Hanif

    Liked by 1 person

  11. Waalaikum Salaam Dear Brother.
    Please wait for the second more detailed article (open letter) on the issue. I will talk about each single thing in more detailed with some extra proofs and references inshaallah.

    From your letter I can see that you are coming from decent family.
    Thanks to your parents! )

    Liked by 1 person

  12. Abdullah says:

    Salaam, please let us know when the honourable mufti taqi replies to your letter, maybe you could travel and speak to him where ever he resides.

    Like

  13. AskMeNot says:

    Assalaamualaikum Sheikh,

    There has been a response that has been made to your specific article on the following page:

    http://ahlussunnah.boards.net/thread/493/response-atabek-fixing-more-prices

    Please have a read. Looking forward to your response.

    Like

  14. AnonyMoose says:

    As-salaamualaikum Dear Sheikh,

    I accept that I have no knowledge of Fiqh and Usool. Forgive me for my incessant questioning, I just want to understand the issue better. You’ve mentioned that the interaction between the bank and the borrower is that of Wakala. Isn’t there a condition for the principal (muwakkil) to owns what is being disposed of? If so, how is this reconciled considering that the currency is created as numbers in an account insitu and not transferred?

    Fi Amanillah,

    Wassalaam,

    Like

  15. There is no any response to my article in this “response “.
    If you read it carefully you understand what I said.

    Like

    1. AskMeNot says:

      From what I’ve understood, the main point of your article is that sale is through agency. You briefly touched on the transaction between the agent and the seller. The response article explains that even if the sale was through agency the transaction between the agent and seller would be invalid due to the undetermined price and references were posted for this. The response article explained with reasoning that the examples you mentioned validating the transaction between the agent and seller were not valid. Excuse me, am I missing something? These issues haven’t been addressed in your article from my reading.

      Like

  16. He never responded. Just read it properly. Keep in your mind that “response ” is from molana, and you will see what I said.

    Like

  17. Hussain Muhammad Emran says:

    Assalamualaikum,

    I hope you are well and in good spirits Shaykh, I pray Allah SWT preserves you and your family and everything else that is dear to you.

    My question is somewhat a straightforward one; according to Hanafi tradition am I allowed to take out a conventional mortgage, is it permissible?

    Jazakallah

    Like

    1. Waalaikum Salam dear Brother.
      Yes, it is!

      Like

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